The city will be forced to cut 85 jobs and reduce spending by $11 million next year as the economic downturn continues to take a major toll on tax revenues, City Manager Steve Sarkozy told the City Council Monday.

Sarkozy, unveiling his preliminary 2011-12 operating budget and 2011-2017 Capital Investment Program (CIP) plan, said the budget permanently reduces city spending and requires across-the-board sacrifices by all employees and departments.

"This budget represents a major reset in the way we do business, and comes with considerable pain," Sarkozy said. "It puts us on a fiscally sustainable course as we continue to chart these very uncertain economic times."

The $671 million operating budget for 2011-2012 is balanced and includes no new taxes. It calls for the elimination of 85 jobs, primarily through attrition, and continues no wage increases for employees into 2011 from 2010. Employees will also be asked to pay a higher share of their health-care costs.

The CIP plan totals $353 million -- a $100 million reduction from the previous plan.

Sarkozy said the operating budget requires all departments to make cuts, with support and administrative services hit the hardest.

"One of our major priorities is to minimize impacts to the police, fire, transportation and other critical, frontline services we provide to our residents by first identifying substantial reductions in internal administrative and support services," Sarkozy said.

Nevertheless, residents throughout the community would be impacted from the reset budget, including:

A reduction in parks services, including a cutback in maintenance, restroom closures, and a reduction in hours at some community centers;

Elimination of popular neighborhood improvement projects such as the construction of traffic circles and speed bumps;

Major reductions in the number of street lights operating in commercial areas;

The closure of the police substation at the city's Transit Center, and

Increased parks and business license fees.

Sarkozy said the reductions would be even deeper had the city not entered the recession well positioned because of its history of strong fiscal stewardship, and the robust economic development it has experienced in recent years.

Moreover, the city took swift action early on in the recession, slashing spending and freezing hiring.

"This has been one of the most challenging fiscal times in the city's history," Sarkozy said. "Moving into 2011 and beyond we know it will be important to continue to carefully monitor the economy and quickly adapt to new situations, including the potential need to cut even further into programs and services."

Sarkozy said the process used to develop the city's budget this year was instrumental in prioritizing the spending cuts and should allow the city to meet potential new fiscal challenges. That process focused on examining all programs and services offered by the city, and ranking them depending on community priority. Hundreds of employees at all levels of the organization participated in the new process.